Hi this is a question to investors with multiple properties (+10) or anyone with the knowledge. 1. How are people able to get past problems with borrowings as i am. I currently have 5 properties- all my loans with the commonwealth bank. My lvr is around 70%. I guess my question is once you hit borrowing capacity with the big 4 banks, do you then move onto other lenders that arent so conservative with their calculations, then after that move into low doc loans. (i know about servicabilities with my properties returning 15.6%, 15.1%, 7.8%, 6.7%) 2. my second question do you all use a trust system or is this NOT necessary (is it necessary for wealth creation strategy?)
A mix of cash flow negative and cash flow positive investments would let you forge ahead I think. For positive cashflow investments I would consider managed funds that distribute regular (say quarterly) income. Its a matter of getting the balance right so that the return from the funds can meet the rental shortfalls from your properties. For serviceability a lender would need to take into account the income from the funds. One of the brokers on this site should be able to assist more with this approach.
Hi I have shifted to all but 2 loans to no doc loans.Spread over 4 lenders.My broker places loans across the 2 mortgage insurers as they have a ceiling each at 2.5 mil.no doc or equity lending doesnt require to show income.I use 50 -60% and stamp to 70% of sworn valuation.The balance I use as service buffer.My aim is to borrow at least 100% plus on each item of property as soon as possible.This is not do able with conventional lenders.Increasing the loans is agiven with no doc loans depending only on the sworn valuation and a clean credit report .I have tested this for myself and found it to be true.Valuation sent in X 70% a bit of stamp duty a $600 legal fee less the existing loan and the rest to my buffer account.I them use the buffer to seed my next purchase.Put it out and bring it home asp.Leaving 30% equity wealth added.To me it is all about having as near as i can 50% over all borrowed.As the values increase I sit down list them work out the lov then work out how much is to be bought to get to 50% again.I have been doing it like I have described for the last 4 years trebeled my equity increase in real wealth around 6 times our household taxable income.without addiing to the proccess from earned income.
Interesting strategy servetus
any litierature on this available ?With careful planning you can keep going once you have maxed out on normal loans by using No/Low Docs. But you must be careful which banks you use early on as this can effect the chances of getting a No/Low Doc approval later.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Servetus – correct me if im wrong but put simply it sounds like your strategy involves borrowing against the increasing equity to purchase more propertes keeping your lvr at a comfortable level. However it is my understanding that this will only work with certain lenders, as you say they do not require to show income.
(this does not work with the big banks as they still take into account your income and serviceability – and thus your normally restricted to 2-3 negative geared properties on an average income before you reach servicability ceiling.)Are you saying that as long as you have the (20%?) deposit for the loan they are willing to lend you the money as long as you claim that you can make the repayments? or do they just valuate your properties and are willing to lend the max amount as long as you declare that you wont struggle – (up to the 2.5mil that you said?)Terry why do say you have to be careful with which banks you use? are you talking about the big banks or the other mortgage lenders?
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